Update: BlackBerry has issued a statement explaining the situation further: "Media reports alleging that BlackBerry 10 has been 'rejected' for U.K. government use are both false and misleading. BlackBerry has a long-established relationship with CESG and we remain the only mobile solution approved for use at 'Restricted' when configured in accordance with CESG guidelines.
"This level of approval only comes following a process which is rigorous and absolutely necessary given the highly confidential nature of the communications being transmitted. The current re-structuring of this approval process, due to the Government Protective Marking Scheme review and the new CESG Commercial Product Assurance scheme has an impact on the timeline for BlackBerry 10 to receive a similar level of approval.
"The U.S. government's FIPS 140-2 certification of BlackBerry 10 and the selection of BlackBerry 10 by the German Procurement Office and Federal Office for Information Security (BSI) underline how our new platform continues to set the standard for government communications."
CESG has also had its say on the matter: "Discussions with BlackBerry are ongoing about the use of the BlackBerry 10 platform in government.
"We have not yet performed an evaluation of the security of that platform, but we expect to be issuing Platform Guidance in the summer. This will cover a number of platforms including Blackberry 10 (and the use of 'Balance').
"We have a long standing security partnership with BlackBerry and this gives us confidence that the BlackBerry 10 platform is likely to represent a viable solution for UK Government."
This could be a major set back for BlackBerry 10 as the brand spanking new operating system hasn't passed government security tests - branding it "not secure enough for essential work".
The UK's Communications-Electronics Security Group (CESG) cleared the older BlackBerry 7.1 system in December last year, reports the Guardian, marking it safe for use up to the "Restricted" classification - which is two levels below "Top Secret".
With the launch of BB 10 the corporate market was seen as its main entry point back into the mobile game; however this latest blow means the Canadian firm will struggle to get the BlackBerry Z10 into hands of people in high places.
It's not just the BlackBerry 10 platform which is at fault, with the BlackBerry Balance software - which allows users to manage personal and work accounts separately - also failing to make the grade.
If at first you don't succeed
The Government is one of BlackBerry's biggest customers in the UK, alongside the NHS, and it would be a massive blow for the firm if it were to lose such a lucrative partnership.
It's not giving up though and you can expect BlackBerry to tweak its BB10 software and then resubmit to CESG to get that coveted clearance rating.
In a statement BlackBerry said: "We are continuing to work closely with CESG on the approval of BlackBerry 10 and we're confident that BlackBerry 10 will only strengthen our position as the mobile solution of choice for the UK government."